NESTLÉ, the largest food company in the world, releasing its half-year results for 2018 on Sunday, recorded an organic growth of 2.8%, with 2.5% real internal growth (RIG) and pricing of 0.3%.

Total sales increased by 2.3% to CHF 43.9 billion (6M-2017: CHF 42.9 billion). Acquisitions and divestments netted to zero. Foreign exchange reduced sales by 0.5%.

Underlying trading operating profit margin was 16.1%, an increase of 20 basis points in constant currency and on a reported basis.

Trading operating profit margin was 14.6%, a decrease of 50 basis points on a reported basis due to higher restructuring costs and net other trading items.

Earnings per share increased by 21.4% to CHF 1.92 on a reported basis. Underlying earnings per share increased by 9.2% in constant currency and by 10.4% to CHF 1.86 on a reported basis.

Free cash flow increased by 52%, from CHF 1.9 billion to CHF 2.9 billion.

Full-year guidance for 2018 confirmed, with organic sales growth expectation narrowed to around 3%; underlying trading operating profit margin improvement in line with our 2020 target. Restructuring costs are expected at around CHF 700 million. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Mark Schneider, Nestlé CEO, said: “Our first half results confirmed that our strategic initiatives and rigorous execution are clearly paying off. Nestlé has maintained the encouraging organic revenue growth momentum we saw at the beginning of the year. In particular, the United States and China markets showed a meaningful improvement. We were also pleased by the enhanced organic growth in our core infant nutrition category.”

“Our margin development is fully consistent with our 2020 target. We are creating value by pursuing growth and profitability in a balanced manner. In line with this approach, we have accelerated our product innovation efforts to drive future growth and initiated significant cost reduction efforts, in particular in Zone EMENA and at our Corporate Center,” he further said.

“As we look towards the second half of 2018, we expect further improvement in our organic revenue growth. Margin improvement is expected to accelerate with further benefits from our efficiency programs and more favorable commodity pricing,” Schneider added.

The group’s organic growth of 2.8% in the first half was in line with our expectations and within our guidance for 2018. RIG was 2.5% and remained at the high end of the food and beverage industry. Pricing contributed 0.3%, reflecting the challenging environment in Europe and lower inflation in some emerging markets.. All categories reported positive growth, led by coffee, petcare, and Nestlé Health Science. Infant nutrition sales growth accelerated, with a broad-based improvement across all geographies, helped by recent product launches, including HMOs (Human Milk Oligosaccharides) infant formula.

Foreign exchange had a negative impact of 0.5%. Total sales increased by 2.3% on a reported basis to CHF 43.9 billion.

Underlying trading operating profit increased by 3.5% to CHF 7.1 billion. The underlying trading operating profit margin increased by 20 basis points in constant currency, and by 20 basis points on a reported basis to 16.1%. — SG